a lot of catastrophic predictions for nothing

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There is a strange atmosphere in the United Kingdom, which is reminiscent of the Brexit referendum campaign in the spring of 2016. On Wednesday, 28 November, catastrophic economic forecasts followed one another. Both the UK Treasury and the Bank of England have forecast recessions in the event of an exit from the European Union (EU) without agreement. In its black scenario, the first forecasts a fall of 7.6% of GDP, and the second of 8%, more than during the financial crisis of 2008. In this case, the Bank of England would anticipate a collapse of 30% real estate prices, a doubling of the unemployment rate and a rise in inflation to 6.5% …

But the complete lack of market reaction – the pound sterling has remained stable – highlights the obvious: these ads are in the political domain and are non-economic information. Not that they are false. "But these are scenarios, not forecasts. This illustrates what could happen, not necessarily what is most likely. "says Mark Carney, the governor of the Bank of England.

Clearly, this is a simple modeling exercise. This is necessary, for example to know if the British financial system would resist the extreme shock that would be a Brexit without agreement. The answer is positive, with UK banks having enough capital to deal with, according to Carney.

At the opposite extreme of the field of possibilities is another scenario, which has received much less attention. In the event of an agreement on Brexit that covers not only trade in goods but also services, including financial, the Bank of England foresees … a slight rebound of the British economy, of about one point of GDP by 2024. Explanation: British growth has fallen between one and two points of GDP since the referendum, and there would be a catch-up effect.

The conclusion is staggering: two and a half years after the referendum, and as Brexit comes into force in four months, economists expect an impact that ranges from -8% to +1%, which is already what they said before the referendum. In other words, they face a thick fog.